THE UK economy grew by 2.1% in August thanks to the Eat Out to Help Out scheme but the pace of recovery slowed.
The GDP rise is the fourth consecutive monthly increase after the economy crashed during the peak of the coronavirus crisis.
The UK economy grew by 2.1% in August thanks to the Eat Out to Help Out scheme
But it’s less than half of what experts had expected, and a major slowdown since July, the figures by the Office for National Statistics (ONS) show.
Analysts expected that GDP would increase by 4.6%, according to a survey by Pantheon Macroeconomics.
In July, GDP was up by 6.4%, and in June it rose by 9.1%, according to ONS data.
GDP for August is 21.7% higher than its April low, when the economy crashed 19.5%, but it still remains 9.2% below February’s level.
Monthly GDP estimates are subject to more uncertainty than usual though and could change.
The accommodation and food services sub-sector boosted GDP in August, as the combined impact of the easing of lockdown rules, the Eat Out To Help Out scheme, and people choosing summer staycations, the ONS said.
The figures come after the UK plunged into its worst ever recession last month, following a quarterly GDP drop of 20.4%.
It was the first time in 11 years that the UK tipped into a recession.
Economists consider two consecutive three-month periods where GDP falls as the technical definition of a recession.
Although GDP rose month-on-month in August and by 8% in the three months to August, the UK is still in a recession given its two previous consecutive quarterly falls.
UK unemployment has so far risen by 730,000 workers since March after another 114,000 Brits lost their jobs in July.
Around 220,000 workers lost their jobs in the quarter between April and June, which is the largest quarterly drop since 2009.
In July, the Office for Budget Responsibility (OBR) predicted unemployment could treble this year to 3million, up from 1.3million in 2019.
The OBR said the true number of job losses depends on what companies do when the furlough scheme ends in October.
Experts are hoping for a V-shaped economic recovery, but these hopes initially faded in July as the UK economy grew just 2.4 per cent in May.
Meanwhile, mortgage approvals surged in July following lockdown, showing a V-shaped recovery for the housing market.
Jonathan Athow, ONS deputy national statistician for economic statistics, said: “The economy continued to recover in August but by less than in recent months.
“There was strong growth in restaurants and accommodation due to the easing of lockdown rules, the Eat Out To Help Out scheme, and people choosing summer ‘staycations’.
He added: “However, many other parts of the service sector recorded muted growth.
“There was limited growth in manufacturing, which remains down on its pre-pandemic level, with car and aircraft production still much lower than the start of the year.”
Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said: “The sharp slowdown in growth indicates that the recovery may be running out of steam, with output still well below pre-crisis levels.
“The increase in activity in August largely reflects a temporary boost from the from the economy reopening and government stimulus, including the Eat Out to Help Out Scheme, rather than proof of a sustained ‘V’-shaped recovery.
“Although the UK remains on course to exit recession in the third quarter, the looming triple threat of surging unemployment, further restrictions and a disorderly end to the transition period means the recent rally in economic output is likely to be short-lived.”
